What Others Are Saying

December 27, 2007

New figures from the Congressional Budget Office suggest that the gap between wealthy Americans and their fellow citizens has now become a chasm - reaching its widest point since the Roaring '20s.

The CBO examined data for 2005, which turned out to be a very good year if you happened to be wealthy. Those at the top of the heap - incomes in the highest 1 percent of Americans - saw their after-tax earnings rise by an average of $180,000.

Think about that: Just the increase in income for the lucky 1 percent equaled more than three times the entire annual take-home pay for the median American family.

By contrast, most Americans barely were treading water in mid-decade, according to newly released tax numbers. Income for the median American family rose only $400. The working poor got only a $200 raise.

The income gap has been widening for nearly three decades, but the Bush administration put the trend on rocket skates. Virtually all the benefit of economic growth in this decade has gone to the very well-off and to corporate profits, while the average American got nothing. Adjusted for inflation, median family income in 2005 was below the level of 2000.

Throughout most of our history, free-market capitalism has been a marvelous mechanism for raising living standards across the board. But at its distribution end, as the new CBO figures clearly show, it is off-kilter. Some tinkering is in order. The topic deserves widespread debate during next year's campaigns.

We could, and perhaps should, let the Bush administration's tax cuts expire. Those tax cuts saved an average of $118,000 per year for people with more than $1 million in income. A middle-income taxpayer saved just $740, according to the Tax Policy Center in Washington. By letting the cuts expire and devoting the revenue to helping pay for universal health care, the nation could remove a major worry for American families.

But won't taxing the wealthy slow investment? Not if history is a guide. The biggest investment and economic boom in history followed tax increases imposed under President Bill Clinton in the early 1990s. The rich got richer, but so did the middle class and working poor. It's time to try it again.

- St. Louis Post-Dispatch

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